| Since the East Asian financial crisis in 1997, currencies of the countries concerned fluctuated greatly, which brought severe shock to national economy. One main reason for the crisis is that there are no dominant currencies in this area. The Chinese government has fully realized that the force of a currency in international reserve and payment is extremely important to a country's international status. In order to resist financial risks and improve RMB's international influence, Chinese government has made great efforts to strengthen the financial and economic cooperation with East Asian countries.However, in the face of the global financial crisis whose fuse is the United States sub-loan crisis in 2007, the low-level regional economic and financial cooperation can not resolve the fundamental problem: the lack of dominant currency. In order to reduce the enormous negative impact on national economy arising out of the volatile exchange rates, and avoid being compelled to reserve U.S. dollars in large quantities as well as buy national debt of the United States to maintain the stability of our foreign exchange reserve, China should formulate a long-term and more specific path to RMB internationalization and gradually move away from excessive dependence on the external dominant currency that is represented by U.S. dollar. This is a challenging work of great practical significance. Based on deep research on successful experience of other currencies internationalization as well as China's unique economic and financial development, this paper will aim at the path of RMB internationalization in order to explore one that is relatively more suitable for RMB.Since the formation of international monetary system in the late 19th century, several currencies with international influence have appeared in succession and a total of three currencies became successful models of internationalization, namely model of Sterling, Dollar and Euro. These are important guide to the research of RMB internationalization path.The United Kingdom is the founder of international monetary system. The process of Sterling internationalization is to bring several independent currencies into an international monetary system with Sterling as the core. The realization of Sterling internationalization marked the foundation of global production and trading system. Therefore, the Sterling model can be considered as the trade hegemony form of currency internationalization.Dollar internationalization, which was established after the international monetary and financial system became mature, is an advanced form based on Sterling. The most significant point of Dollar internationalization compared with Sterling is that the financial market system founded by the United States is much more developed. Moreover, as the core of highly developed international financial market, the United States has held the power to formulate international financial and capital market rules. It is obvious that the Dollar model has been upgraded from trade hegemony to the form of financial hegemony.The Euro model is based on the theory of OCA. Through collective coordination mechanism, European countries achieved monetary union and gradually realized currency internationalization, breaking the original model that depended on a single currency to achieve internationalization slowly. Although Euro hasn't gone beyond Dollar yet and its future remains unclear, EU has a greater voice in international financial and monetary field, along with more firm faith of cooperation than before. The Euro model opened up a third way for those countries and areas that have trouble with how to choose exchange rate mechanism.As far as the internationalization of RMB, RMB has definite influence in the surrounding region but is much far away from internationalization. As a medium of international exchange, RMB has certain influence in areas such as border trade and tourism, but the scope of outside circulation remains very limited. As the unit of international account, RMB has become the main settlement currency in Sino-Vietnamese and Sino-Burmese border trade. At the same time, RMB has the potential to become means of international storage, but obviously it is a very limited role now.Currently, the comparative advantages of RMB internationalization lie in the sustained and rapid development of national economy, adequate foreign exchange reserves and the dominant position of trade in East Asia. At the same time, there are still a number of constrains. After general analysis of all kinds of factors, the author believes that the main advantage of RMB internationalization is the accumulation of foreign trade, and the constraint relates to China's economic and financial foundation that only can be achieved a breakthrough after long-term efforts. So RMB internationalization must be a long and arduous process. China should transfer her existing strengths to the real power of economy and finance, and undoubtedly this is the only way to RMB internationalization.Based on the summary of three successful models, as well as the actuality and influencing factors of RMB internationalization, this paper suggests that the principles to be kept in the path of RMB internationalization are as follows:Firstly, to progress step by step. It is necessary to formulate a long-term development path of RMB internationalization combined with our own characteristic. A progressive route should be carried out from low level to a high one and from surrounding to region.After founding steady monetary system and developed financial market as well as upgrading our core competitive superiority, we will endeavor to realize the core stage of RMB internationalization.Secondly, the principle of cooperation. From the view of Sterling and Dollar, China does not have to rely on her own power to realize the internationalization of RMB. In order to strengthen the international influence of domestic currency, we can do nothing but to reinforce the cooperation with other countries and be down the road of regionalization. The Euro model is only successful one that achieve currency internationalization by regionalization. The experience of Euro tells us that in view of the huge differences in the economic development and little culture identity between China and her neighbouring countries, it will be extremely difficult to conduct in-depth monetary cooperation and transfer part of the monetary sovereignty to each other. China has to make much more efforts to achieve this objective. Thirdly, the principle of coordination. The Euro model indicates that the foundation of European Economic and Monetary Union resulted from currency cooperation and a unified market. To realize the internationalization of RMB by regional monetary cooperation, we must strengthen economic and financial cooperation with surrounding economies and make merchandise, personnel, labor and capital flow freely.Fourthly, the principle of paying equal attention to strength and opportunities. It is really necessary to hold the great historical opportunity in the process of RMB internationalization. When the chance to exceed dominant currency does not come yet, what we can do is to wait patiently and focus on enhancing our foreign trade strength. Once the chance appears, we must grasp it in time and advance the RMB internationalization a major step forward.Based on the above principles, this paper formulated 4 concrete steps of RMB internationalization following the thought of from extending to neighboring countries to regionalization, and than to internationalization.Firstly, setting up stable coinage and a sound financial market system. After summing up the experience of currencies internationalization, the author believes that the establishment of monetary system with stable valuta will provide sufficient confidence to RMB internationalization. Based on the progress made in the reform of RMB exchange rate system and the principle of State Standard, China should improve the pricing mechanism of RMB exchange rate further as well as keep fluctuations of RMB exchange rate controllable and gradual. The stability of domestic price level and full employment should be considered as the primary objective of our monetary polic. Under the premise of meeting domestic objectives, the exchange rate of RMB should be keep stable as far as we can, which can enhance foreign countries'confidence in RMB. Well-developed financial market is the necessary precondition of RMB internationalization. In view of the experience of the U. K. and the U. S.,based on effective supervision of financial system, the innovation should be encouraged to make funds and resources flow and be used fully.Secindly, setting up off-shore market of RMB and extanding its regional force. Because China's financial markets can not be perfect within a short time, setting up off-shore market of RMB is beneficial to promote the standardization of RMB circulation and enhance its regional influence. The primary objective of RMB offshore market is to promote RMB cross-border settlement trade and enhance its function of overseas investment and storage. Because of the undevelopment of China's domestic financial markets and the lack of financial talents along with the capability of innovation and responding to financial risks, risk control and prevention should be considered first during the foundation of RMB offshore market. In particular, it is important to avoid the impact of financial risks from off-shore market on domestic markets. Both HongKong and Shanghai have fovorable financial market environment. While considering the unique nature of RMB offshore market and other factors, this paper thinks of HongKong as the ideal city to found RMB offshore market. At the same time, the financial cooperation between HongKong and Shanghai should be strengthened in order to set up effective communication between offshore and domestic market.Thirdly, building the free trade area with surrounding regions and fostering regional economic base for RMB internationalization.Based on the experience of currencies internationalization,this paper believes that it is extremely significant for RMB internationalization to improve the free-trade area with neighbouring countries and enlarge it gradually. Especially in the preparatory phase of RMB internationalization, the regional economy base is an important guarantee for improving the influence of RMB. Considering the situation of East Asia, the cooperation between China and Japanese should be intensified. Making use of Japan's production and technical advantages along with China's resource advantages and broad market, it is feasible to establish the Pan-East Asian free-trade network of which core is China and Japan. The merchandise trade, services along with capital will move freely and entirely in East Asia.Fourthly, strengthening the exchange rate cooperation with other East Asian countries, which is the only way for the internationalization of RMB. RMB regionalization is a very important part of internationalization. Though the stable RMB system, RMB offshore market and free-trade area will enhance influence of RMB within the scope of neighbourhood even larger, it is hard to realize RMB internationalization after these steps. Only when RMB regionalization and regional monetary cooperation in East Asia come true, the obstacles of RMB internationalization will be reduced and China will win the support and help from other East Asian countries. This shows that the East Asian monetary cooperation is the only way for the internationalization of RMB and an important measure to make RMB from regionalization to internationalization. Because the OCA indexes between East Asian countries are obviously too big, and there is not broad political trust among these countries, sufficient trust and experience should be on the basis of fianacial and exchange rate cooperation, which is the necessary conditions for comprehensive monetary cooperation.
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